THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[18:00:10]

WOLF BLITZER, CNN ANCHOR: Happening now: Not backing down. House Speaker Paul Ryan says he's not changing the GOP's health care bill, despite growing dislike on both sides of the aisle. But the top Senate Republican hints changes will have to be made. Will the White House walk away from Ryan, even though it says President Trump is proud of the bill?

Tapped out? The president's spokesman says Mr. Trump is confident that evidence will vindicate him and his claim that he was wiretapped by President Obama. The administration is asking for more time to provide evidence to congressional investigators, as the White House concedes the president was not spied on by a microwave oven.

Putin's next play. Growing concern over the sudden presence of Russian personnel and aircraft, including drones in Egypt, just miles from the Libyan border. Is Vladimir Putin looking to expand influence in North Africa like he did in Syria?

And digging out. Millions of people in the Northeast U.S., they are feeling the impact of a late-season blizzard dropping as much as two feet of snow. Thousands of flights have been canceled, disrupting travel across the country. How long will it take for things to get back to normal?

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Republicans are struggling tonight with House Speaker Paul Ryan's health care plan. Many are rattled by the Congressional Budget Office analysis showing it will increase the number of uninsured Americans by tens of millions in coming years. Some GOP lawmakers are insisting the bill must be changed in order to pass.

But sources tell CNN Paul Ryan intends to push it forward as is.

At the White House, Press Secretary Sean Spicer says President Trump is -- quote -- "extremely confident" he will be vindicated on his claim that President Obama ordered his phones at Trump Tower wiretapped during the campaign. But the administration has yet to offer any evidence supporting that claim.

And we're following a late winter storm marching across the U.S. Northeast. Snowfall, heavy in some areas, continues tonight. And at least three deaths are now blamed on the storm. Travel troubles are being felt across the country with more than 8,000 flights canceled through tomorrow.

We're covering all of that, much more this hour with our guests, including Senator Angus King of the Intelligence Committee, Senator Ben Cardin, the top Democrat on the Foreign Relations Committee, and our correspondents and expert analysts are also standing by.

Let's begin with the unfolding drama over the Republican plan to replace Obamacare.

Our congressional correspondent, Phil Mattingly has the latest.

Phil, Republicans are deeply divided, and they are struggling.

PHIL MATTINGLY, CNN CORRESPONDENT: Yes, it's no secret that these divisions existed, but the degree to which they have spilled out into the open today in the wake of that damaging CBO report making very clear the problem right now just ensuring they have the votes to move this forward in the House, let alone actually get it to the president's desk.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): Republican leaders are now scrambling to contain the fallout from a devastating Congressional Budget Office report.

SEN. JOHN CORNYN (R), TEXAS: Given the freedom to make a decision that is consistent with your own economic interests, and you decide -- may decide not to buy it.

MATTINGLY: As the Trump administration continues to attack the veracity of the numbers altogether.

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: This is exactly what we thought the CBO would come forward with. They're terrible at counting coverage.

MATTINGLY: For GOP leaders, a hint of good news in the report, most notably the deficit savings, $337 billion over 10 years, and the projection that overall premiums would drop by an average of 10 percent by the time the GOP plan fully takes hold, even as that might account for older Americans who simply can't afford a plan altogether.

But the top-line number of uninsured, 14 million by next year, 24 million by 2026, sparking new Democratic attacks and mockery of the Republican Party.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: No one wants to claim this bill. If it's so good, why aren't they rushing to have their names on it? Trump wants to call it Ryancare. Ryan wants to call it Trumpcare. It's classic Abbott and Costello. If it's so good, why don't they want their names on it?

MATTINGLY: The political fallout, from newspaper headlines across battleground states, to inside the GOP Conference itself, leading to accusations that the GOP's three-step strategy, an initial bill, regulatory actions followed by regulatory action requiring Democratic support, is fiction.

SEN. TOM COTTON (R), ARKANSAS: There is no three-step plan. That is just political talk. Some mythical legislation in the future that is going to garner Democratic support and help us get over 60 votes in the Senate, if we had those Democratic votes, we wouldn't need three steps.

[18:05:01]

MATTINGLY: This as the alt-right publication Breitbart has suddenly released a five-month-old audio of a call between Speaker Paul Ryan and House Republicans in the wake of the infamous "Access Hollywood" video.

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: His comments are not anywhere in keeping with our party's principles and values. I am not going to defend Donald Trump, not now, not in the future. You guys know I have real concerns with our nominee. I hope you appreciate that I'm doing what I think is best for you, the members, not what's best for me.

MATTINGLY: The contents of the call have been known for months, leading to questions about the timing and rationale for the release by a publication ardently opposed to Ryan's bill.

Breitbart also the former home of the president's chief strategist, Steve Bannon. And there's a tenuous balancing act between conservatives and centrists inside the Republican Party, with some far-right members hardly sounding anywhere near compromise.

REP. MO BROOKS (R), ALABAMA: The fact that the Republican welfare plan is not as bad as Obamacare does not mean that it's good.

MATTINGLY: And Republican senators from states that expanded Medicaid under President Obama calling for a total rewrite, but the White House making clear this is the only game in town. And it's not or never.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: This is the only vehicle that seeks to achieve what people on our side of the aisle have been talking about since 2010. This is it.

(END VIDEOTAPE)

MATTINGLY: Wolf, that's a very similar message to what you hear from House leaders, but there did appear to be a split today, Press Secretary Sean Spicer saying that they were in negotiations with House Republicans about substantive changes to the bill throughout the process in the House.

I can tell you, in speaking with House Republican leadership aides, they say no such changes are planned. Perhaps trying to reconcile these differences, Speaker Paul Ryan and Majority Leader Kevin McCarthy held a phone call late this afternoon with President Trump on that pathway forward.

One major red flag they probably talked about, Ileana Ros-Lehtinen, a Republican, a moderate, just came out in opposition to the bill as it's currently written. Her rationale, Wolf? She just discovered that there simply would not be enough coverage for her constituents.

The White House is warning nervous Republicans against derailing the bill, saying bluntly it's the best, possibly only chance they have to repeal Obamacare, those strong words from the White House press secretary.

Our senior White House correspondent, Jim Acosta, is joining us.

Jim, Sean Spicer says President Trump is proud of this bill.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, Wolf. White House Press Secretary Sean Spicer said that today, despite a lot of opposition that Phil just laid out to this bill from Republicans.

The president is proud of this bill. Spicer repeatedly slammed the CBO's estimates that 14 million people will be uninsured under the GOP plan by next year, 24 million in a decade from now, basically saying that the CBO is better at crunching numbers and costs than they are people who are covered under any kind of health care system.

But Spicer did concede that scores of Americans will go without insurance, perhaps millions, but that the Republican proposal will address that shortfall with an improved system. Here's what he had to say.

(BEGIN VIDEO CLIP)

QUESTION: The president's OK with...

SPICER: No, he's not.

(CROSSTALK)

QUESTION: ... millions of people who aren't...

(CROSSTALK)

SPICER: No, no, the president's goal is to provide health care coverage to every American. And right now they're not getting that. And by giving them more choices at a lower cost, more Americans can either buy health care for their family or themselves or in a lot of cases for their business without paying the penalty, which is a what a lot of them are doing, or forcing people into exchanges that have fewer and fewer choices. The system now is not working. The costs are going up. The choices

are going down. And deductibles are going up. That is not an option. And for every American, I mentioned this earlier, to make this look like a choice, there really isn't a choice. The system that we have now is failing.

(END VIDEO CLIP)

ACOSTA: Now, for all of this talk of this is the only action in town, this is the only way to repeal and replace Obamacare, Sean Spicer did acknowledge during the briefing today that the White House is working with those Republican leaders on potential changes to the current plan that are aimed at boosting support for the proposal before the House votes on it.

Wolf, Sean Spicer said they don't want to settle for 216 votes, or whatever that majority number is. They want to get beyond that. But at this point, it's hard to see how they can achieve a majority right now, Wolf.

BLITZER: Jim, Sean Spicer also said today that the president is extremely confident, those words, extremely confident, he will be vindicated on his wiretapping claim, even though the White House still has produced no evidence. Update our viewers on that.

ACOSTA: That's right, Wolf.

Once again, the White House did not provide any evidence today to back up the president's claim that former President Obama wiretapped him. This is a claim that the president made 10 days ago now.

The House Intelligence Committee has given the Trump administration until next Monday to come up with that proof, with the threat of possibly using a subpoena to force the issue, which is surprising to hear from a Republican-led House Intelligence Committee, but for the first time, the White House said definitively today that something will be turned over to Congress.

[18:10:13]

What, we have no idea, but White House Press Secretary Sean Spicer told me it will bolster the president's claims. Here's what he had to say.

(BEGIN VIDEO CLIP)

ACOSTA: Evidence will be presented?

SPICER: I don't want to get ahead of -- as I mentioned, I'm not going to...

ACOSTA: Because the House Intelligence Committee has given the administration until Monday to...

SPICER: I understand. No, it has given the DOJ...

ACOSTA: Right.

SPICER: ... and the Department of Justice -- again, we covered this yesterday.

But I'm not going to get ahead of what they may or may not submit.

ACOSTA: Possible there may be nothing?

SPICER: No, that's not -- I think there is -- at least from where we stand, we know that there is significant reporting on this subject that...

ACOSTA: Something will be presented?

SPICER: Yes, I feel very confident of that. Yes.

(END VIDEO CLIP)

ACOSTA: So there you have it, Wolf, not nothing. Something will be presented. The White House is still, though, not committing to whether the president will make a statement on all of this when that so-called evidence is turned over to Congress.

As you know, he has basically been silent since making this accusation against former President Obama. But when you talk to Republicans up on Capitol Hill, a lot of Republicans telling me privately they want this issue out of the way now so they can deal with health care, which may be an even bigger headache to come, Wolf.

BLITZER: Jim Acosta at the White House for us, thanks very much.

Let's some get more on all this.

Independent Senator Angus King of Maine is joining us. He's a member of the Intelligence and Budget Committees.

Senator, thanks for joining us.

SEN. ANGUS KING (I), MAINE: Thank you, Wolf.

BLITZER: We have lots to discuss.

You're an independent. You caucus with the Democrats. But based on what you're hearing, do Senate Republicans have the vote count necessary to pass this Republican health care plan? First of all, take a look at the House and then in the Senate.

KING: Well, I think it's going to have tough sledding in both places.

I think there are enough senators that I have heard from, Republican senators, who I wouldn't say they're committed to vote against it, because we don't know exactly what's going to emerge, but they're very skeptical.

And as I think more and more people realize the impacts that this is going to have on their states, I think support is going to start to eke away, and I think we're already starting to see that in the House today.

BLITZER: You're talking to these moderate Senate Republicans who aren't necessarily very enthusiastic.

I have heard maybe six or maybe even a dozen Republicans, whether moderates or more conservative, in the Senate are not likely to go ahead with this unless there are some major, major changes. Do you see any of those changes coming?

KING: Well, somebody said something today about negotiation. I haven't heard of any negotiation or any significant changes.

And, by the way, it's not all moderates. One of the loudest voices has been Senator Tom Cotton of Arkansas, and I think he's one of the more conservative members of the Senate, and he's been very critical. He said they ought to back off, take a deep breath and start over.

There's -- you know, this business about the CBO is just nonsense, Wolf. They're the nonpartisan referee. And, in fact, the head of the CBO was appointed by the Republican leadership. He's a Republican, came out of the Bush Council of Economic Advisers. They're playing it straight.

The only reason their estimates were wrong in terms of number of people covered back when the Affordable Care Act passed was the Supreme Court allowed the states to take an option on expanding Medicaid. About a third of them didn't expand it. And that accounts for the difference in the numbers.

These numbers are the only numbers we have. And there's no reason that -- I mean, the idea that they're no good and that they somehow made a mistake is just -- it just doesn't pass the straight face test.

BLITZER: The health and human services secretary, Tom Price, said he believes nobody will be worse off financially as a result of this Republican plan, but you have said this plan, in your words, will hammer Maine, your home state.

So why is he saying this? Do you think he has bad information? Is he lying to the American people?

KING: I called it extreme disingenuousness, Wolf.

I don't -- how can you take almost a trillion dollars out of support for people having health insurance and then turn around and say everybody's going to be better off? It just makes no sense whatsoever. It is going to hammer Maine.

If you were designing a health care plan to hammer people in their 50s who are working, making $20,000, $30,000, $35,000 a year, it would be this plan. If you're 64 years old, make $26,000 a year, your premium under the Affordable Care Act under Obamacare is something like $1,800 a year. It would go to $14,000 a year under the plan that's been proposed.

I mean, that's just ridiculous. They talk about choice, that people can choose and have a choice, and they have access. Always be careful with that word access, Wolf. What that means is, I have access to buy a Maserati. I can walk in and buy a Maserati. But when they tell me it's $200,000, I say, I'm sorry, I can't buy it.

[18:15:00]

Having access is not the deal. Having coverage is what we're really talking about. There's a lot of loose talk around here, but the reality is -- and, oh, by the way, about the cutting of the deficit of $300 billion, they have done that by shifting $880 billion of Medicaid costs to the states.

You know, I could cut the deficit, too, if we decided the states were going to handle the Air Force, for example. I mean, if you -- that's a phony savings. You're just transferring it from the federal budget to the state budget and calling that a lowering of the federal deficit.

I guess it is. But it's merely shifting the cost to somebody else. So this plan, it just -- it gets worse and worse the more you read about it.

BLITZER: The press secretary, Sean Spicer, also said the report, the CBO report, didn't account for changes to the FDA approval process for drugs, allowing health insurance to be sold across state lines to make it more competitive. Do you support those proposals? The assumption is they could help lower costs.

KING: Well, certainly approving improving the FDA process, I think everybody agrees that that would be helpful. I don't see that as a big money saver.

And this idea of selling insurance across state lines, you can do that now. We have got companies in Maine that are selling in four, five different states, and they qualify -- they have to qualify to do business in Maine. That's always been a talking point, but I have never seen where that's going to save anything like the kind of money that we're talking about here.

We're talking about essentially almost doubling the number of uninsured people under this bill, according to the Congressional Budget Office. And, again, the people that are going to be hardest- hit are lower income and particularly older people.

And I haven't heard anybody deny that, because that's really one of the hard pieces of this bill. The other thing that I heard Sean Spicer say was that the Obamacare is about to collapse or it's in a death spiral.

The CBO report explicitly found that that was not true. It said, specifically, that the ACA is now stable, and the new plan would be stable. But to keep saying that the ACA is in a death spiral, again, the only evidence, the best evidence we have are the professionals at the Congressional Budget Office, who are nonpartisan, or actually led by a Republican that was appointed by the Republicans, have said the current system is stable and it provides a basis for providing coverage to 24 million people that won't have it if this current plan is passed.

BLITZER: Senator Angus King of Maine, thanks for joining us.

KING: Yes, sir.

BLITZER: Just ahead: He received classified documents about Russian election meddling two days before President Trump's inauguration. So what was in them?

So, let me get your reaction to what Sean Spicer said. He said the president was extremely confident, his words, that he would be vindicated by the evidence.

Respond to this. Do you believe there is evidence backing up those four tweets he posted 10 days ago, making this serious allegation against President Obama?

CARDIN: I find it very difficult to understand how there's anything to this.

The president of the United States does not have that ability, has to go through the courts. There's no indication at all of anything behind this. And as I think it was Senator Graham who said it, let's see the specific information. Why doesn't the president make that available?

It just points out again another reason why we need an independent investigation as to what was happening between the Trump campaign and Russia in our elections. The American public has a right to know exactly what was going on.

BLITZER: But, so far, just to be precise, Senator, you have seen no evidence that there was actual collusion between the Trump campaign and Russia?

CARDIN: That's correct. And I have no specific information. There are certainly concerns.

We know that Russia was attempting to interfere with our election. We know that. We know that they were playing favorites as to who they wanted. We know that they met with key Americans, including those in the Trump Organization, during that period of time. That's what we do know. We do not know of any direct connections.

BLITZER: The House Intelligence Committee's going to be holding a hearing on Russia next Monday. As the ranking member of the Foreign Relations Committee, what do you hope comes out of that? Because all of the key intelligence officials, the FBI director, James Comey, among others, they will all be testifying in open session.

CARDIN: Well, I think that's helpful.

I hope that they can make some sense out of some of the allegations that have been made by Mr. Trump. My guess is that they could completely eliminate those types of speculations.

I would hope that they could give us the framework in which Russia was operating. Some of their techniques could not be done in open session. We certainly understand that. But I think the American people have a right to know why Russia was attempting to influence our election in favor of Mr. Trump and what type of contacts were they making in the United States, and, more importantly, what they're intending to do moving forward here in the United States or in Europe.

That needs to be done in an open setting, and that information needs to be made available to the American people.

[18:25:00]

What's being done in Congress is important. But what we really need is an independent commission that has full jurisdiction to go wherever the facts may lead, with nonpartisan members who can devote their full time to this very important assignment of understanding what Russia was doing here in the United States.

BLITZER: Your Democratic colleague Mark Warner of Virginia, he's the Senate Intelligence Committee vice chair. He expressed concern today over the informal, unofficial political adviser to Donald Trump Roger Stone's ties to Russia and wouldn't rule out calling him to come before the committee.

Do you believe Roger Stone should be called before the committee?

CARDIN: Oh, absolutely.

Some of the statements that he has made, some of his contacts are certainly ones that we need to know more about. So, yes, there are a lot of contacts regarding Mr. Trump that need to be understood. And, again, until we get the facts, we won't make any conclusions, but we certainly -- any investigation will have to look into those contacts.

BLITZER: Senator, CNN has been told that in the days before President Trump's inauguration, the State Department sent over a batch of documents to you detailing Russian efforts to meddle in the U.S. elections. What can you tell us about those documents?

CARDIN: As you recall, there had already been public reports about Russia's engagement in our election process. The intelligence community had confirmed that.

In my role as the ranking Democrat on Senate Foreign Relations Committee, I asked that information relevant to the State Department be made available to the Senate Foreign Relations Committee. That information was made available to both the Democrats and Republican staff people on the committee.

The State Department marked it as classified, so I can't go into the specifics, but I can tell you it was -- information I had before receiving that information was not changed by what I received.

BLITZER: Was it damaging to the Trump administration, without spelling out classified information? Was it simply damaging to the Trump administration's arguments?

CARDIN: Well, again, I can't go into specifics as to what information was made available to me in a classified setting, but I can tell you that the course that has been followed here was based upon information I had before that information.

BLITZER: Senator Ben Cardin, thanks so much for joining us.

CARDIN: Thank you.

BLITZER: Just ahead: The White House says the president is proud of the Obamacare replacement plan, but one GOP senator says it's not what President Trump promised or Republicans ran on.

And tens of millions of Americans are hit by a fierce winter storm. Thousands of schools are closed. Thousands of flights have been canceled. Will travel be affected for days ahead?

(COMMERCIAL BREAK)

BLITZER: The White House is trying to cast doubt on the Congressional Budget Office report on the Republican healthcare plan. The nonpartisan analysis says the bill would result in 14 million more uninsured Americans next year and another 10 million over the next decade.

[18:32:39] Let's get some more with our experts and analysts. David Swerdlick, the White House downplaying this CBO report, saying the CBO reports about Obamacare were consistently wrong. But they're not doing a lot to really sell this Republican plan, at least not yet publicly.

Do you have a sense the White House is trying to distance itself from this Paul Ryan-led bill?

DAVID SWERDLICK, ASSISTANT EDITOR, "THE WASHINGTON POST": Wolf, I have a sense that the White House wants to have it both ways. They want to keep Congress going on the bill, because ultimately, the White House and Republicans want to be able to say they've made good on their promise to repeal and replace Obamacare.

At the same time, President Trump and, I think, the White House staff around him know that, if this bill goes through, they will own it and all the results that come from it. And so they don't want to have President Trump's fingerprints too closely on it, at least not at this stage.

BLITZER: Helps to explain why Sean Spicer is refusing today to brand it as Trumpcare.

Rebecca Berg, the president prides himself on being a salesman. He's a good one, too. But tomorrow he's doing a campaign rally in Tennessee. Why aren't we seeing the president all over television, out there on the road, trying to sell this bill, like President Obama did back in 2009 in selling Obamacare?

REBECCA BERG, CNN POLITICAL ANALYST: Well, maybe this will be the start of it, Wolf. And the president is also traveling to Kentucky next week, of course, the home state of Senator Rand Paul, who has been a very public, very vocal opponent of the healthcare bill as it currently stands. So I'm sure we'll hear a lot about it there, as well. And that's a state where many more people have gotten covered as a result of the Affordable Care Act. So it's an important place for the president to be making this point.

But you're absolutely right: if you compared this effort by the part -- on the part of the White House and on the part of House and Senate leaders, it really pales in comparison to what we saw from Democrats and the president in 2009 in the lead-up to Affordable Care Act.

But it's worth noting that there are a couple of differences. President Obama also got a late start getting on the road to support that bill. It took until the summer, and then he started doing more media availabilities, more town halls across country. So there was a bit of a lag there, as well.

But he also had a very powerful political organization behind him. He had OFA from the campaign that he then used to support his legislative agenda. And President Trump, because he didn't have much of a campaign apparatus, he doesn't really have much of a political team at this point on the outside working to amplify these issues for him. We really don't see anything on the airwaves.

[18:35:05] And at the same time, conservative groups are opposing the legislation as it is right now. So in fact, you're seeing much more pushback from groups that would normally support this, as opposed to groups stepping up and backing this bill on the airwaves, which is very important.

BLITZER: All right. Let me bring Jackie in.

Jackie, both the White House and Senate, they're suggesting there will be amendments. But CNN is reporting Paul Ryan, the speaker, isn't planning on changing his bill.

So where will this leave the relationship between the White House and the speaker?

JACKIE KUCINICH, CNN POLITICAL ANALYST: Well, I mean, maybe Paul Ryan won't change his bill. And if he can get it past the House, he'll have to contend with, perhaps, a different version of the Senate bill in a conference committee at the end of the day.

But you do see a lot of double-talk, I guess, with the White House. The White House telling conservatives he's willing to -- the president is willing to negotiate here with some of the things they want and Paul Ryan saying no. So how this comes out in the wash, we'll have to see, but at the end of the day, Paul Ryan is the leader of the House, and he's the one who brings the bill to the floor.

BLITZER: David, last night the conservative website, Breitbart, which used to be run by Steve Bannon, the president's chief strategist in the White House right now, published -- released audio of Paul Ryan trashing Donald Trump back when he was the Republican presidential nominee in October of last year. Listen to this.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: His comments are not anywhere in keeping with our party's principles and values. There are basically two things that I want to make really clear as for myself as your speaker. I am not going to defend Donald Trump, not now, not in the future. As you probably heard, I disinvited him from my first congressional district GOP event this weekend, a thing I do every year. And I'm not going to be campaigning with him over the next 30 days.

Look, you guys know I have real concerns with our nominee. I hope you appreciate that I'm doing what I think is best for you, the members, not what's best for me.

(END VIDEO CLIP)

BLITZER: David, CNN, as you know, reported about the call at the time back in October. It happened right after that "Access Hollywood" tape was released. So why is the audio just now coming out and being released by Breitbart?

SWERDLICK: Yes. I mean, Wolf, it's hard to say, but you know, for the more conspiracy-minded, the timing does seem pretty convenient, if you think about Breitbart as an outlet being critical at various times of Speaker Ryan. Steve Bannon being critical of Speaker Ryan. And also President Trump at various times not getting along with Speaker Ryan.

On the one hand, they need Ryan to lead his caucus, to pass this bill in the House. The healthcare bill in the House. And on the other hand, you know, I think for them to maintain what they see as control over the big picture of Republican internal politics, it helps them, perhaps, if he's undermined.

But is there a connection between this and what's going on between the White House and Breitbart or the White House and Republicans in Congress? We just don't know.

BLITZER: All right. Everybody stand by. Got a quick reminder for our viewers, Dana Bash and I will co-host a very timely and important CNN town hall with Dr. Tom Price. He's the secretary of Health and Human Services. Tomorrow night, 9 p.m. Eastern, right here on CNN.

Just ahead, a grand jury returns a sweeping indictment against a group of U.S. Navy officials, allegedly bribed by a foreign defense contractor nicknamed Fat Leonard.

(COMMERCIAL BREAK)

[18:43:12] BLITZER: We have some news just coming into THE SITUATION ROOM about a Navy bribery scandal. Our Pentagon correspondent, Barbara Starr, has been working the story for us.

Barbara, I understand there are some new charges.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: New indictments by the Justice Department, Wolf, in an ever-widening Navy bribery scandal that's already been going on for years, dating all the way back to 2012, 2013.

Today the Justice Department indicting another nine people, including a retired Navy admiral, over charges, allegations of bribery.

This is the so-called "Fat Leonard" case, a nickname for a contractor out in Singapore who allegedly bribed Navy officials for years, trying to get lucrative Navy contracts in that area. There are allegations of days-long, multiple-days-long partying, "Fat Leonard" once picking up a $50,000 party bill for these Navy personnel. Drinking. Women. Prostitutes. Some of it very unsavory, Wolf.

How unsavory, you might ask? Well, let me read you just one sentence out of the Justice Department indictment. You might not want your children in the room for this one. The Justice Department saying, quote, "During the party" -- referring to one party -- "historic memorabilia related to General Douglas MacArthur was used by the participants in sexual acts."

This case has gone on a long time. The Navy certainly hopes this is the beginning of the end of the indictments -- Wolf.

BLITZER: Barbara Starr at the Pentagon. Thanks very much. Very disturbing developments indeed.

The White House, meanwhile, wants to take a budget axe to foreign aid, with deep cuts to global peacekeeping and development programs. Let's go to our global affairs correspondent, Elise Labott.

Elise, this would be done, what, through a major decrease of State Department funding?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: That's right. A major decrease, Wolf. And humanitarian workers say the results could be devastating. Now, President Trump is making good on his pledge to put America

first, but his deep cuts to foreign aid target the world's most vulnerable. Now, members of his own party and cabinet warned they could make America less safe.

(BEGIN VIDEOTAPE)

LABOTT (voice-over): In what would be an unprecedented retreat of U.S. commitments overseas, the White House wants to slash foreign aid to the United Nations and other world bodies -- organizations that keep the peace, help prevent disease and famine, and combat nuclear proliferation.

The deep cuts amount to about $20 billion in funding. A whopping 37 percent cut to the budget for the State Department and the U.S. Agency for International Development which provides humanitarian assistance worldwide.

Funding for the U.N. peacekeeping and development assistance cut nearly in half. Payments to other international groups dramatically reduced.

MICK MULVANEY, OFFICE OF MANAGEMENT AND BUDGET DIRECTOR: The budget takes the policies that President Trump laid out on the campaign trail and turns them into numbers. That's it. That's all it does.

What did the president say on the campaign trail? I'm going to spend more money on defense. I'm going to spend more money enforcing the border.

LABOTT: President Trump forewarned deep cuts to foreign aid at a conference of conservatives last month.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is the United States of America that I'm representing. I'm not representing the globe. I'm representing your country.

LABOTT: And his new ambassador to the U.N., Nikki Haley, says the error of the U.S. shouldering the burden is over.

NIKKI HALEY, U.S. AMBASSADOR TO THE UNITED NATIONS: We contribute 22 percent of the U.N.'s budget, far more than any other country. We have to start encouraging other countries to have skin in the game.

LABOTT: After several testy exchanges with the White House, aides to Secretary of State Rex Tillerson tell CNN the former ExxonMobil CEO now has the flexibility to make the cuts over three years.

But Trump's biggest fight could come from his secretary of defense who for years has warned about gutting the State Department budget.

GEN. JAMES MATTIS, U.S. MARINE CORPS: If you don't fund the State Department fully, then I need to buy more ammunition ultimately.

LABOTT: And from lawmakers who warn the cuts would be devastating to the war on terror. SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: To President Trump, if you

destroy soft power, those diplomatic tools that lead to holding and building, we'll never win this war. If you take off the table building a small schoolhouse for poor young girl in Afghanistan, Iraq or Syria to give her an education, we'll never win this war.

(END VIDEOTAPE)

LABOTT: And officials say other State Department offices also on the chopping block could include the Bureaus of Democracy, Human Rights and Labor, and Educational and Cultural Affairs. That's the bureau that runs the Fulbright program where foreign exchange students come to the U.S. and often return home with a more positive view of America.

Wolf, more than 300 heads of state and 1,500 ministers received an education through the Fulbright and have been strong U.S. allies. Many believe it's one of the U.S.'s cheapest diplomatic bargains, Wolf.

BLITZER: Elise Labott reporting for us -- Elise, thanks very much.

Just ahead, the major storm pummeling the Northeast. Snow continues to fall tonight. We'll have the latest forecast.

Plus, we have new details of a new Russian buildup. Why has Vladimir Putin deployed drones to the Libyan border?

(COMMERCIAL BREAK)

[18:52:51] BLITZER: Millions of people are digging out from the powerful storm that blanketed the Northeast. The late-season snow continues to disrupt travel across the region.

Brian Todd has been working the story for us. He's in New Jersey right now.

Brian, you've been seeing the effects of this storm all day. Tell our viewers what you've seen.

BRIAN TODD, CNN CORRESPONDENT: A lot of treacherous conditions on the roads, Wolf, from Maryland to Pennsylvania to New Jersey where we are now. Just very, very dangerous conditions. We've been through all those states.

And we're going to pull over here. We're in Watchung, New Jersey, we're going to pull over here and show you what police are now concerned about as we head toward nightfall.

I just got off the phone with a New Jersey state police and they tell us that they have responded to 226 accidents today, Wolf, throughout the state of New Jersey and more than 470 (AUDIO GAP) motorist aids, the instance of when police came to the aid of a motorist.

And that really, Wolf, is just what state police are responding to. That doesn't even count municipal police, the local police. So, you've got just the New Jersey 226 accidents that state police have responded to, more than 470 motorist aids.

Police in Pennsylvania and Maryland have told us they have responded to hundreds of accidents in those states.

And we're just entering another dangerous period but a state police trooper just told me here in New Jersey what they're concerned about is the typical mistake that people are going to make is going to be because they think that because it's not snowing anymore, they can jump in their cars and go at normal speed. Well, you can't do that because a lot of secondary roads like this one here in Watchung, New Jersey, not completely plowed over yet, and they've got refreezing that's going to happen right now. You're getting into the evening hours, temperatures are starting to drop, a lot of these roads are going to refreeze, they're going to be very dangerous, especially these secondary roads. Not so much highways right now, but secretary roads really problematic as we get into the evening hours.

Also, Wolf, this storm has been very much of a wind event throughout the East Coast. State police trooper told me they're concerned about snow drifts. The winds are going to pick up here. It's been very windy all day here, 70 miles an hour up in Massachusetts and some coastal areas, but the police here are saying wind picking up snow drifts, blowing them into motorists' vehicles.

[18:55:05] That's going to be a concern as we head into the evening hours, Wolf.

So, even though in places like here in New Jersey where it's not snowing anymore, people think the danger might have passed. It has not passed, Wolf. Still very dangerous here.

JENNIFER GRAY, AMS METEOROLOGIST: Not at all, Wolf. Still snowing hard across portions of northern New England, anywhere from Upstate New York to northern Maine. We've seen blizzard-like conditions all across this area.

You can see Boston now in basically a rain event. It is all switching over. Could see a small little dose of snow before it's all said and done. But really wrapping up quickly as we get into tomorrow morning. We'll just have a little bit of light snow left across portions of Upstate New York, maybe into northern Jersey and Pennsylvania.

But the wind event still happening, still 22-mile-per-hour winds in New York, still 26-mile-per-hour winds in Boston, up over on the Cape, 36-mile-per-hour winds. We've had wind gusts of 55 to 70 miles per hour with this storm so far.

Here's the radar. You can see all of the snow still happening right now. The darker shades right there, that indicates very heavy snowfall, two to three inches of snow per hour in some instances. So, very dangerous still and then in Boston, rain happening now.

It switches back over to snow or even with the temperatures dropping below freezing tonight, we are going to see all of that freeze. And so, it is going to be a mess and a very dangerous situation on the roads.

Look at this, 12 inches of snow in Hartford, Connecticut, seven in Central Park, just a couple miles away from the city. We had up to a foot of snow outside New York. You can see these impressive totals anywhere from 30 inches of snow in Damascus, Pennsylvania, Wolf.

BLITZER: All right, Jennifer. Jennifer Gray reporting.

There's growing concern meanwhile over a Russian buildup near the Libyan border.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Expand yet again. You know, Wolf, we saw the Russians do this in Crimea. We've seen them do it in Syria. And it looks like one more time, Putin may be on the move.

(BEGIN VIDEOTAPE)

STARR (voice-over): The Trump administration firmly keeping the door open to cooperating with Vladimir Putin to fight ISIS in Syria.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: The president has been very clear in the past that if a country shares our commitment to defeating ISIS and we can work with them in an area of shared mutual concern, then we will do so.

STARR: But Russia is already moving beyond Syria, launching a new effort in Libya to exert its influence and change the security landscape in a country where there is still no central government more than five years after Moammar Gadhafi was ousted.

Top U.S. commanders now increasingly concerned.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: What is Russia trying to do in Libya, General Waldhauser?

GEN. THOMAS WALDHAUSER, COMMANDER, U.S. AFRICA COMMAND: Senator, Russia is trying to exert influence on the ultimate decision of who becomes and what entity becomes in charge of the government inside Libya.

GRAHAM: They're trying to do in Libya what they've been doing in Syria?

WALDHAUSER: Yes, that's a good way to characterize it. STARR: U.S. officials tell CNN, in recent weeks, reconnaissance

revealed at an air base in western Egypt, just 60 miles from the Libyan border, Russian drones, aircraft and personnel have arrived. Across the border, Libyan oil installations are not far away. Fighting has erupted between rival groups for control.

The Russians deny they are in Egypt. The U.S. is trying to figure out how deeply involved Moscow will get inside Libya.

HAIM MALKA, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: This doesn't only give them greater power in Africa, but it gives them a foothold in the Mediterranean, on the southern edge of Europe, where they can potentially threaten U.S. interests and those of U.S. allies. So, this is a big deal.

STARR: Russia's influence is moving fast. Earlier this month, the U.S.-backed leader based in western Libya was in Moscow meeting with Foreign Minister Sergey Lavrov.

TAYEZ SERAJ, LIBYAN PRIME MINISTER (through translator): Our relations with Russia are strong and deep-rooted. So, we plan to intensify relations at all levels and in all areas, including the economy, politics, security and military affairs.

STARR: More worrisome for the U.S., Libyan strongman Khalifa Haftar, who is fighting extremists to get the eastern oil fields under his control. Haftar has already visited Moscow twice and those Russian planes and personnel are close by if he needs them.

(END VIDEOTAPE)

STARR: So, now, the Trump administration looking one more time at the possibility of having to deal with the Russians on a new front -- Wolf.